Seiko Manufacturers is expocted to commence business on 01 July 2020, making smart watches The budgeted figures for July 2020 (Question 1) and August 2020 (Question 2) are provided tbelow. You are expected to assist Seiko Manufacturers in its planning phase by undertaking CVP analysis and preparing an income statement using absorption costing Question 1 (10 marks) Information The following information was extracted from the budget of Seiko Manufacturers for the month ended 31 July 2020. Estimated production and sales 3 000 units Selling price per watch Variable manufacturing costs per watch: - Direct materials R900 R270 Direct labour R180 - Overheads R90 Fixed manufacturing overheads R282 000 Marketing and administrative costs: Fixed costs R150 000 Variable costs 10% of sales 1.3 The sales manager made the following proposal to increase profitability: Decrease the selling price by R40 per unit and increase advertising expense by R24 000 with the expectation that sales volume will increase by 10%. Should the sales manager's proposal be accepted? Motivate your answer with the relevant calculations. Seiko Manufacturers is expocted to commence business on 01 July 2020, making smart watches The budgeted figures for July 2020 (Question 1) and August 2020 (Question 2) are provided tbelow. You are expected to assist Seiko Manufacturers in its planning phase by undertaking CVP analysis and preparing an income statement using absorption costing Question 1 (10 marks) Information The following information was extracted from the budget of Seiko Manufacturers for the month ended 31 July 2020. Estimated production and sales 3 000 units Selling price per watch Variable manufacturing costs per watch: - Direct materials R900 R270 Direct labour R180 - Overheads R90 Fixed manufacturing overheads R282 000 Marketing and administrative costs: Fixed costs R150 000 Variable costs 10% of sales 1.3 The sales manager made the following proposal to increase profitability: Decrease the selling price by R40 per unit and increase advertising expense by R24 000 with the expectation that sales volume will increase by 10%. Should the sales manager's proposal be accepted? Motivate your answer with the relevant calculations.